THE PR. COMMISSIONER OF INCOME TAX vs. M/S GOKULA EDUCATION

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ITA/20/2023HC KarnatakaKAHC01001452202305 August 2024Bench: S.G.PANDIT,C.M. POONACHA6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court noted that the questions involved in these appeals were covered by the Supreme Court's decision in *Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P) Ltd.*. The learned counsel for the Revenue was not in a position to dispute the applicability of this judgment. Consequently, in terms of the Supreme Court's decision, the appeals were dismissed. The substantial questions of law were answered in favour of the assessee and against the Revenue. The operative direction was the dismissal of the appeals, implying that the ITAT's orders deleting the assessed income under Section 153A were upheld.

What were the facts?

The Revenue, comprising the Principal Commissioner of Income Tax and the Deputy Commissioner of Income Tax, filed three appeals (ITA Nos. 20, 21, and 22 of 2023) before the High Court of Karnataka. These appeals challenged orders passed by the Income Tax Appellate Tribunal (ITAT) for Assessment Years 2011-12, 2012-13, and 2013-14. The ITAT had confirmed the orders of the Appellate Commissioner, which in turn had upheld the orders of the Deputy Commissioner. The core of the dispute revolves around the deletion of assessed income under Section 153A of the Income Tax Act, 1961, by the ITAT. The High Court admitted these appeals to examine substantial questions of law.

What were the issues?

The High Court was to decide three common substantial questions of law: 1. Whether the Tribunal was correct in deleting the assessed income under Section 153A of the Income Tax Act, 1961, given that Section 153A empowers the Assessing Officer (AO) to 'assess' or 'reassess' income. 2. Whether the Tribunal was correct in deleting the assessed income under Section 153A, considering the Karnataka High Court's ruling in *Canara Housing Development Co. Ltd. vs. DCIT* that initiating proceedings under Section 153A reopens the assessment even if an order was already passed. 3. Whether the Tribunal erred in not considering that the AO must re-determine the total income of the assessee, including all previously made additions, while passing an order under Section 153A. The Revenue argued that Section 153A empowers the AO to assess or reassess income and that previous additions should be considered. The assessee contended, and the Tribunal held, that the deletion of assessed income under Section 153A was justified, relying on the principle that Section 153A reopens assessments. The Revenue did not dispute the applicability of a Supreme Court decision.

Which sections of the Income-tax Act were involved?

Section 153A,Section 260-A

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:30975-DB ITA No. 20 of 2023 C/W ITA No. 21 of 2023 ITA No. 22 of 2023

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF AUGUST, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 20 OF 2023 C/W INCOME TAX APPEAL NO. 21 OF 2023 INCOME TAX APPEAL NO. 22 OF 2023 IN ITA No.20/2023

BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME TAX CENTRAL, 3RD FLOOR, C.R.BUILDING, QUEENS ROAD, BENGALURU-560 001.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(2) 3RD FLOOR, C.R.BUILDING, QUEENS ROAD, BENGALURU-560 001. APPELLANTS (BY SRI. M DILIP.,ADVOCATE)

AND:

M/S GOKULA EDUCATION FOUNDATION (MEDICAL) MSR NAGAR,MSRIT POST, MATHICARE, BENGALURU-560 064 PAN AAATG 1779Q …RESPONDENT (BY SRI. A SHANKAR., SENIOR ADVOCATE FOR SRI. CHANDRASEKHAR V., AND

Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:30975-DB ITA No. 20 of 2023 C/W ITA No. 21 of 2023 ITA No. 22 of 2023

SRI. S ANNAMALAI, ADVOCATES)

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.499/BANG/2021 DATED 18.07.2022 FOR ASSESSMENT YEAR 2011-2012 ANNEXURE-C CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 1(2), BENGALURU AND ETC.

IN ITA No.21/2023

BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME TAX CENTRAL, 3RD FLOOR, C.R.BUILDING, QUEENS ROAD, BENGALURU-560 001.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(2) 3RD FLOOR, C.R.BUILDING, QUEENS ROAD, BENGALURU-560 001. …APPELLANTS (BY SRI. M DILIP., ADVOCATE)

AND:

M/S GOKULA EDUCATION FOUNDATION (MEDICAL) MSR NAGAR, MSRIT POSTS, MATHICARE, BENGALURU-560 064 PAN AAATG 1779Q …RESPONDENT (BY SRI. A SHANKAR, SENIOR ADVOCATE FOR SRI. CHANDRASEKHAR V.,AND SRI. ANNAMALAI, ADVOCATES)

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, ALLOW THE

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NC: 2024:KHC:30975-DB ITA No. 20 of 2023 C/W ITA No. 21 of 2023 ITA No. 22 of 2023

APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.500/BANG/2021 DATED 18.07.2022 FOR ASSESSMENT YEAR 2012-2013 ANNEXURE-C CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 1(2), BENGALURU AND ETC.

IN ITA No.22/2023

BETWEEN:

1.

THE PR. COMMISSIONER OF INCOME TAX CENTRAL 3RD FLOOR, C R BUILDING QUEENS ROAD BENGALURU – 560001

2.

THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(2) 3RD FLOOR, C R BUILDING QUEENS ROAD, BENGALURU - 560001 …APPELLANTS (BY SRI. M DILIP.,ADVOCATE)

AND:

M/S GOKULA EDUCATION FOUNDATION (MEDICAL) MSR NAGAR MSRIT POSTS, MATHICARE BENGALURU - 560064 PAN. AAATG 1779Q …RESPONDENT (BY SRI. A SHANKAR, SENIOR ADVOCATE FOR SRI. CHANDRASEKHAR V.,AND SRI. ANNAMALAI, ADVOCATES)

THIS ITA / INCOME TAX APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN, ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA NO.501/BANG/2021 DATED 18.07.2022 FOR ASSESSMENT YEAR 2013-2014 ANNEXURE-C CONFIRMING THE ORDER OF THE APPELLATE COMMISSIONER AND

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NC: 2024:KHC:30975-DB ITA No. 20 of 2023 C/W ITA No. 21 of 2023 ITA No. 22 of 2023

CONFIRM THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 1(2), BENGALURU AND ETC.

THESE APPEALS, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA

ORAL JUDGMENT

(PER: HON'BLE MR JUSTICE S.G.PANDIT)

These appeals by the Revenue, under Section 260-A of the Income Tax Act, 1961, are against the orders dated 18.07.2022 passed by the Income Tax Appellate Tribunal, Bengaluru in ITA No.499/Bang/2021 for the Assessment Year 2011-12 (Annexure-C), in ITA No.500/Bang/2021 for the Assessment Year 2012-13 (Annexure-C) and in ITA No.501/Bang/2021 for the Assessment Year 2013-14 (Annexure-C) respectively, confirming the orders passed by the Deputy Commissioner of Income Tax, Central Circle-1(2), Bengaluru, in respect of the Assessment Years 2011-12, 2012- 13 and 2013-14 respectively relating to the respondent – assessee.

2.

In the above appeals, this Court admitted the appeals on 17.4.2023, 27.03.2023 and 15.02.2023,

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NC: 2024:KHC:30975-DB ITA No. 20 of 2023 C/W ITA No. 21 of 2023 ITA No. 22 of 2023

respectively to examine the following common substantial questions of law: “1. Whether under the facts and in the circumstances of the case and in law the Tribunal is right in deleting the assessed income under section 153A of the Income Tax Act, 1961, wherein section 153A empowers the AO to "assess" or "reassess the income"?

2.

Whether under the facts and in the circumstances of the case and in law, the Tribunal is right in deleting the assessed income u/s 153A as the Hon'ble High Court of Karnataka in the case of Canara Housing Development Co. Ltd. vs. DCIT held that "when once the proceedings are initiated under Section 153A of the Act, the legal effect is even in case where the assessment order is passed it stands reopened"?

3.

Whether under the facts and in the circumstances of the case and in law, the Hon'ble Tribunal is right in right in not considering the fact that the AO has to re- determine the total income of the assessee by considering all the additions made previously while completing the order under section 153A of the Act?”

3.

Heard Sri M.Dilip, learned counsel for the revenue and Sri A.Shankar, learned Senior Counsel for the assessee.

4.

During the course of hearing, it is brought to our notice that the questions involved in the above appeals are covered by the decision of the Hon’ble Supreme Court in the case of Principal Commissioner of Income-tax, Central-3 v. Abhisar Buildwell (P) Ltd., reported in (2023) 149 taxmann.com 399.

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NC: 2024:KHC:30975-DB ITA No. 20 of 2023 C/W ITA No. 21 of 2023 ITA No. 22 of 2023

5.

Learned Counsel Sri Dilip is not in a position to dispute the same.

6.

In terms of the decision of the Hon’ble Supreme Court (supra), the appeals are dismissed. The questions raised are answered in favour of the assessee and against the revenue.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

ND List No.: 1 Sl No.: 55

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